The first silent film in Tamil, Keechaka Vadham, was made by R. Nataraja Mudaliar in 1916.[5] The first talkie was a multi-lingual, Kalidas, which released on 31 October 1931, barely 7 months after India's first talking picture Alam Ara[6] By the end of the 1930s, the legislature of the State of Madras passed the Entertainment Tax Act of 1939. Tamil cinema later had a profound effect on other film making industries of India, establishing Chennai as a secondary hub for Telugu cinema, Malayalam cinema, Kannada cinema and Hindi cinema.[7][8] In its modern era, Tamil films from Chennai have been distributed to various overseas theaters in Singapore, Sri Lanka, South Africa, Malaysia, Japan, Oceania, the Middle East, Western Europe, and North America.[9] The industry also inspired filmmaking in Tamil diaspora populations in other regions, such as in Europe and Canada.[10]

Film studios in Chennai are bound by legislation, such as the Cinematography Film Rules of 1948,[11] the Cinematography Act of 1952,[12] and the Copyright Act of 1957.[13] In Tamil Nadu, cinema ticket prices are regulated by the government. Single screen theaters may charge a maximum of ₹50, while theaters with more than three screens may charge a maximum of ₹120 per ticket.[14]

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In 1897, M. Edwards first screened a selection of silent short films at the Victoria Public Hall in Madras. The films all featured non-fictional subjects; they were mostly photographed records of day-to-day events. The film scholar Stephen Hughs points out that within a few years there were regular ticketed shows in a hall in Pophams Broadway, started by one Mrs. Klug, but this lasted only for a few months. Once it was demonstrated as a commercial proposition, a Western entrepreneur, Warwick Major, built the first cinema theater, the Electric Theater, which still stands. It was a favorite haunt of the British community in Madras. The theater was shut down after a few years. This building is now part of a post office complex on Anna Salai (Mount Road). The Lyric Theater was also built in the Mount Road area. This venue boasted a variety of events, including plays in English, Western classical music concerts, and ballroom dances. Silent films were also screened as an additional attraction.[15]Swamikannu Vincent, a railway draftsman from Tiruchirapalli, became a travelling exhibitor in 1905. He showed short movies in a tent in Esplanade, near the present Parry's Corner, using carbide jet-burners for projection. He bought the film projector and silent films from the Frenchman Du Pont and set up a business as film exhibitor.[16] Soon, he tied up with Path, a well-known pioneering film-producing company, and imported projectors. This helped new cinema houses to sprout across the presidency.[17] In later years, he produced talkies and also built a cinema in Coimbatore.[18]

To celebrate the event of King George V's visit in 1909, a grand exhibition was organised in Madras. Its major attraction was the screening of short films accompanied by sound. A British company imported a Crone megaphone, made up of a film projector to which a gramophone with a disc containing prerecorded sound was linked, and both were run in unison, producing picture and sound simultaneously. However, there was no synched dialogue. Raghupathy Venkiah Naidu, a successful photographer, took over the equipment after the exhibition and set up a tent cinema near the Madras High Court.[15] With this equipment, he screened the short films Pearl Fish and Raja's Casket in the Victoria Public Hall. When this proved successful, he screened the films in a tent set up in Esplanade. These tent events were the true precursors of the cinema shows. Venkiah traveled with this unit to Burma (now Myanmar) and Sri Lanka, and when he had gathered enough money, he put up a permanent cinema house in Madras—Gaiety, in 1914, the first cinema house in Madras to be built by an Indian. He soon added two more, Crown Theater in Mint and Globe (later called Roxy) in Purasawalkam.

Swamikannu Vincent, who had built the first cinema of South India in Coimbatore, introduced the concept of "Tent Cinema" in which a tent was erected on a stretch of open land close to a town or village to screen the films. The first of its kind was established in Madras, called "Edison's Grand Cinemamegaphone". This was due to the fact that electric carbons were used for motion picture projectors.[19]

Most of the films screened then were shorts made in the United States and Britain. In 1909, an Englishman, T. H. Huffton, founded Peninsular Film Services in Madras and produced some short films for local audiences. But soon, hour-long films, which narrated dramatic stories, then known as "drama films", were imported. From 1912 onwards, feature films made in Bombay (now Mumbai) were also screened in Madras. The era of short films had ended. The arrival of drama films firmly established cinema as a popular entertainment form. More cinema houses came up in the city.

Fascinated by this new entertainment form, an automobile dealer in the Thousand Lights area of Madras, R. Nataraja Mudaliyar, decided to venture into film production. After a few days’ training in Pune with the cinematographer Stewart Smith, the official cinematographer of Lord Curzon’s 1903 Durbar, he started a film production concern in 1916.

The man who truly laid the foundations of south Indian cinema was A. Narayanan. After a few years in film distribution, he set up a production company in Madras, the General Pictures Corporation, popularly known as GPC. Beginning with The Faithful Wife/Dharmapathini (1929), GPC made about 24 feature films. GPC functioned as a film school and its alumni included names such as Sundara Rao Nadkarni and Jiten Banerji. The studio of GPC was housed in the Chellapalli bungalow on Thiruvottiyur High Road in Madras. This company, which produced the most number of Tamil silent films, had branches in Colombo, Rangoon and Singapore.

The Ways of Vishnu/Vishnu Leela, which R. Prakasa made in 1932, was the last silent film produced in Madras. Unfortunately, the silent era of south Indian cinema has not been documented well. When the talkies appeared, film producers had to travel to Bombay or Calcutta to make films. Most films of this early period were celluloid versions of well-known stage plays. Company dramas were popular among the Madras audience. The legendary Otraivadai drama theatre had been built in 1872 itself in Mint. Many drama halls had come up in the city where short silent films were screened in the afternoon and plays were enacted in the night.

The scene changed in 1934 when Madras got its first sound studio. By this time, all the cinema houses in Madras had been wired for sound. Narayanan, who had been active during the silent era, founded Srinivasa Cinetone in which his wife worked as the sound recordist. Srinivasa Kalyanam (1934), directed by Narayanan, was the first sound film (talkie) produced in Madras. The second sound studio to come up in Madras was Vel Pictures, started by M. D. Rajan on Eldams Road in the Dunmore bungalow, which belonged to the Raja of Pithapuram. Before long, more sound studios came up. Thirty-six talkies were made in Madras in 1935.

The main impacts of the early cinema were the cultural influences of the country. The Tamil language was the medium in which many plays and stories were written since the ages as early as the Cholas. They were highly stylised and nature of the spectacle was one which could attract the people. Along with this, music and dance were one of the main entertainment sources.[20]

The Bharata Natyam, a classical dance, was the oldest performed dance form of India and so impacted the cultural heritage to a very great extent. Usually the kings sitting in the court were seen admiring dancers, and enjoying the music and dance along with the courtiers. Themes of this kind were commonly found in films. The theory of rasa dating back to ancient Sanskrit drama is believed to be one of the most fundamental features that differentiate Indian cinema.[citation needed]

Along with the music and dance of ancient India, the novels and books written by many authors were used for making the films and sometimes, the entire story was adopted from the book alone and made into films. The ancient Indian epics of Mahabharata and Ramayana which have exerted a profound influence on the thought and imagination of popular Indian cinema, particularly in its narratives. Examples of this influence include the techniques of a side story, back-story and story within a story. Indian popular films often have plots which branch off into sub-plots which were common in the early Tamil cinema.[20]

There is a strong Indian tradition of narrating mythology, history, fairy tales and so on through song and dance. Whereas Hollywood filmmakers strove to conceal the constructed nature of their work so that the realistic narrative was wholly dominant, Indian filmmakers made no attempt to conceal the fact that what was shown on the screen was a creation, an illusion, a fiction. However, they demonstrated how this creation intersected with people's day-to-day lives in complex ways.[21] By the end of the 1930s, the State of Madras legislature passed the Entertainment Tax Act 1939.

In the year 1916 a studio, the first in south India, was set up in Madras at 10 Millers Road, Kilpauk. He called it the India Film Company. Rangavadivelu, an actor from Suguna Vilasa Sabha, a theatre company then, was hired to train the actors. Thirty-five days later, the first feature film made in south India, The Extermination of Keechakan/Keechakavatham, based on an episode from the Mahabharata, was released produced and directed by R. Nataraja, who established the India Film Company Limited.(The Destruction of Keechaka).[22] This marked the birth of Tamil cinema. Yes, Keechakavatham was the first Tamil film. The characters spoke Tamil. However, sound in film had not been invented yet, so what they spoke was written in cards that appeared on the screen between shots, and they were called “title cards”. Though Nataraja Mudaliyar was the first in south India to found a studio, it was Venkiah’s son Raghupathy Prakasa and A. Narayanan who put the cinema industry on a firm footing. After a stint of training in England in film-making, Prakasa came to Madras and set up the Star of the East Film Company. The studio, located behind Roxy Theatre, was modern by the prevailing standards. Beginning with Bhishma’s Vow/Bhishma Pratignai (1921), Prakasa made a number of movies which were screened all over the country, with title cards in Tamil, Telugu, Hindi and Gujarati. Though the company lasted only for four years, it played a crucial role in the growth of cinema in this part of the country. Many pioneers of south Indian cinema such as Y.V. Rao (father of actor Lakshmi) and C. Pullaiya were trained here.[citation needed]

A colleague of Narayanan, R. Padmanabhan, started his own film unit, Associate Films, and made a few films. The studio was in the site now occupied by Paragon Talkies in Madras. It was here that K. Subrahmanyam imbibed the basics of film-making. For nearly a quarter of a century of silent era in the studios founded in Madras and other cities, more than 100 feature films were produced and screened all over the presidency and beyond.[citation needed]

During the 1920s, silent Tamil language film were shot at makeshift locations in and around Chennai, and for technical processing, they were sent to Pune or Calcutta. Later, some films featuring M. K. Thyagaraja Bhagavathar were shot in those cities as well. In 1935, A Ramaiah from Thanjavur established the first studio, Star Combines, in Kodambakkam.

K. Subrahmanyam, a lawyer by profession, decided to go into movie-making and founded the Motion Pictures Producer Combines studio in 1937. But the studio was gutted in a fire accident, widely believed to be arson by business rivals. The property came up for auction through a court order. Subrahmanyam persuaded his friend Vasan to bid for it and enter film production. Vasan, though hesitant in the beginning, was there on the due date to bid and Gemini Studios came into being.Gemini Studios became a landmark of Madras. National and international leaders dropped in at the studios and spent time with Vasan. Jawaharlal Nehru once visited the studio and watched the shooting that was on. In December 1956, Chinese Premier Zhou Enlai spent a few hours in Gemini Studios. With Chandraleka (1948), Gemini extended its operation to the Hindi film world as well. But with the arrival of independent film-makers, studios had to close down in the 1960s. Among the big studios, AVM has outlived many other studios, producing memorable films.[citation needed]

In the 1930s AVM set up its makeshift studioIndependent Tamil film production in places outside of India, including Sri Lanka, Singapore, Canada, and Europe, took prominence over the late-20th century. The history of filmmaking of Tamil language films in Canada dates back to the early 1990s. It is primarily based in the metropolitan region of the Greater Toronto Area in Southern Ontario.[citation needed]

In addition to this, the big studios such as Gemini, AVM and Jupiter were going full throttle. Cinema in Madras, which had been insular, got a whiff of fresh air in 1952 when foreign films were screened in the city as part of the first International Film Festival. Its impact was felt on Tamil cinema in the form of films such as That Day/Andha Naal (1954) and Who is this boy/Yaar Paiyan (1955).[citation needed]

Tamil films are also made in Sri Lanka where Tamil is one of the official languages since the ancient times. The film My Magic directed by SingaporeanEric Khoo became Singapore's first film to be nominated for the Palme d'Or at Cannes. Some of these films have involved one or more film personalities from the Chennai industry as well. in the town of Karaikudi, and during the same decade, full-fledged film studios were built in Salem (Modern Theatres Studio) and Coimbatore (Central Studios, Neptune, and Pakshiraja). By the mid-1940s, Chennai became the hub of studio activity with two more film studios built in Chennai, Vijaya Vauhini Studios and Gemini Studios. Later, AVM Studios shifted its operations to Chennai. Thus, with the undivided Madras Presidency being the Capital to most of South India, Chennai became the center for Tamil- and Telugu-language films. Also, most of the pre-independence era drama and stage actors joined the film industry from the 1940s, and Chennai became the hub for South Indian–language film production and the cinema of Sri Lanka before independence.[citation needed]

The Chennai film industry produced the first nationally distributed film across India in 1948 with Chandralekha.[23] They have one of the widest overseas distribution, with large audience turnout from the Tamil diaspora alongside Hindi films. They are distributed to various parts of Asia, Africa, Western Europe, North America and Oceania.[24]

Keechaka Vadham (1918) was the first Silent film made in South India.[25]Kalidas (1931) was the first Tamiltalkie film made in 1931.[26]Kalava was the first Full-length Talkie made entirely in Tamil.[27]Nandanar (1935) was the first film for American film director Ellis R. Dungan[28]Balayogini released in 1937 was considered to be first children's film of South India.[29] It is estimated by the Manorama Yearbook 2000 (a popular almanac) that over 5,000 Tamil films were produced in the 20th century. Tamil films have also been dubbed into other languages, thus reaching a much wider audience. There has been a growing presence of English in dialogue and songs in Chennai films.

Tamil films have enjoyed consistent popularity among populations in South East Asia. Since Chandralekha, Muthu was the second Tamil film to be dubbed into Japanese (as Mutu: Odoru Maharaja[30]) and grossed a record $1.6 million in 1998.[31] In 2010, Enthiran grossed a record $4 million in North America.

Tamil films enjoy significant patronage in neighboring Indian states like Kerala, Karnataka, Andhra Pradesh, Maharastra, Gujarat and New Delhi. In Kerala and Karnataka the films are directly released in Tamil but in Andhra Pradesh they are generally dubbed into Telugu where they have a decent market.[35] There have been instances where dubbed films from Tamil making more profits than Telugu films; dubbed Tamil films had a significant impact over the Telugu box office in 2005 and 2011.[35][36]

Many successful Tamil films have been remade by other film industries. It is estimated by the Manorama Yearbook 2000 (a popular almanac) that over 5,000 Tamil films were produced in the 20th century. Tamil films have also been dubbed into other languages, thus reaching a much wider audience. There has been a growing presence of English in dialogue and songs in Chennai films. It is not uncommon to see movies that feature dialogue studded with English words and phrases, or even whole sentences. Some movies are also simultaneously made in two or three languages (either using subtitles or several soundtracks). Chennai's film composers have popularized their highly unique, syncretic style of film music across the world. Quite often, Tamil movies feature Madras Tamil, a colloquial version of Tamil spoken in Chennai.

Independent Tamil film production in places outside of India, including Sri Lanka, Singapore, Canada, and Europe, took prominence over the late-20th century. The history of film making of Tamil language films in Canada dates back to the early 1990s. It is primarily based in the metropolitan region of the Greater Toronto Area in Southern Ontario. Tamil films are also made in Sri Lanka where Tamil is one of the official languages since the ancient times. The film My Magic directed by SingaporeanEric Khoo became Singapore's first film to be nominated for the Palme d'Or at Cannes. Some of these films have involved one or more film personalities from the Chennai industry as well.

Average annual film output in Tamil film industry peaked in 1985. The Tamil film market accounts for approximately 0.1% of the gross domestic product (GDP) of the state of Tamil Nadu.[37] For the purpose of entertainment taxes, returns have to be filed by the exhibitors weekly (usually each Tuesday).[38] Costs of production have grown exponentially from just under ₹ 40 lakhs in 1980 to over ₹ 11 crores by 2005 for a typical star-studded big-budget film. Similarly, costs of processing per print have risen from just under ₹ 2,500 in 1980 to nearly ₹ 70,000 by 2005.[citation needed]

The Government of Tamil Nadu made provisions for an entertainment tax exemption for Tamil films having titles in words from the Tamil language only.[39] This is in accordance with Government Order 72 passed on 22 July 2006. The first film to be released after the new Order was Unakkum Enakkum. The original title had been Something Something Unakkum Ennakkum, a half-English and a half-Tamil title.[39] In July 2011, strict norms on entertainment tax were passed which stated that films which were given a 'U' certificate by the Central Board of Film Certification alone were eligible for tax exemption and those with an 'A' certificate could not fit into this category.[40]

There are 3 major roles in the Tamil film value chain viz producer, distributor and exhibitor.[41] The distributor purchases theatrical distribution rights from the producer for exhibiting the film in a defined territory. The distributor performs enhanced functions such as:

part-financing of film (in case of minimum guarantee / advance based purchase of film rights)

localized marketing of film

selection of exhibition halls

managing the logistics of physical print distribution

There are three popular approaches to transfer of distribution rights via distribution contracts:

Minimum Guarantee + Royalty – Here, the producer sells the distribution rights for a defined territory for a minimum lump sum irrespective of the box office performance of the film. Any surplus is shared between the producer and distributor, in a pre-set ratio (typically 1:2) after deducting entertainment tax, show rentals, commission, print costs and publicity costs. Effectively, the distributor becomes a "financier" in the eyes of the market. This is the most common channel available to high budget producers.

Commission – Here, the distributor pays the producer the entire box office collection after deducting commission. So, the entire risk of box office performance of the film remains with the producer. This is the most common channel available to low budget producers.

Outright Sale – Here, the producer sells all distribution and theatrical rights for a defined territory exclusively to a distributor. Effectively, the distributor becomes a "producer" in the eyes of the market. So, the entire risk of box office performance of the film remains with the distributor.

There are four popular approaches to transfer of exhibition rights via exhibition contracts:

Theatre Hire – Here, the exhibitor pays the distributor the entire box office collection after deducting entertainment tax and show rentals. So, the entire risk of box office performance of the film remains with the distributor. This is the most common channel for low-budget films, casting rank newcomers, with unproven track record.

Fixed Hire – Here, the exhibitor pays the distributor a maximum lump sum irrespective of the box office performance of the film. Rental is not chargeable per show. Any surplus after deducting entertainment tax is retained by the exhibitor. Effectively, the exhibitor becomes a "producer" in the eyes of the market. So, the entire risk of box office performance of the film remains with the exhibitor. This is the most common channel for high budget films, casting established front-runners, with proven track record.

Minimum Guarantee + Royalty – Here, the exhibitor pays the distributor a minimum lump sum irrespective of the box office performance of the film. Any surplus after deducting entertainment tax and show rental is shared in a pre-set ratio (typically 2:1) between the exhibitor and distributor. But risk of deficit remains with the exhibitor. This is the most common channel preferred by single screens.

Revenue Share – Here, the exhibitor shares with the distributor, in a pre-set ratio (typically 1:2), the entire box office collection of the film after deducting entertainment tax. Rental is not chargeable per show. So, the entire risk of box office performance of the film is shared between the exhibitor and distributor. This is the most common channel preferred by multiplex screens.

The industry includes several groups who organize their own events based on different issues of major concern. Rather than forming separate and distinct groups, each association occasionally collaborate for certain events. These associations are based on profession in the industry, such as a directors' association or producers' association. The most notable association is the South Indian Film Artistes' Association which is a group of all prominent Tamil film actors. Formed in 1952 under the leadership of actor Sivaji Ganesan, the association governs film or media-related issues that may arise to its members. The association has also continued to conduct philanthropic activities, as well as public outcries for certain political and humanitarian issues. The current president of the association is the actor-turned-politician R. Sarath Kumar.[42]Kamal Haasan has won several Indian film awards including four National Film Awards and 19 Filmfare Awards. With seven submissions, Kamal Haasan has starred in the highest number of films submitted by India for the Academy Award Best Foreign Language Film.[citation needed]

Hughes, Stephen P. (24–25 February 2005). "Tamil Cinema as Sonic Regime: Cinema Sound, Film Songs and the Making of a Mass Culture of Music". New Perspectives on the Nineteenth and Twentieth Century. Keynote address: South Asia Conference at the University of Chicago. Chicago, Illinois.